How The 2025 Autumn Budget Makes Salary Sacrifice Car Schemes More Valuable Than Ever

The 2025 Autumn Budget has proven tough to swallow for many employees across the UK, with what’s being labelled as a ‘stealth tax’ hitting many people’s back pockets.

The combination of tax changes, freezes, and reduced allowances will continue to diminish take-home pay for many.

All this points towards a need for solutions that ensure employees’ money works harder than ever—even when it feels like they are losing more and more of it.

The decision to extend the freeze on income tax thresholds will see many workers pulled into higher tax bands without seeing a real-term pay increase. Even small salary rises could result in a disproportionate tax hit.

As the UK government cuts relief through traditional saving methods, Employee Car Benefit Schemes remain unaffected for now, making it timely to consider implementing or revisiting a scheme that offers real value for employees.

From April 2026, the amount you can put in a Cash ISA tax-free will reduce from £20,000 to £12,500—so where will you place those funds? On top of this, salary sacrifice on pension contributions will be capped at £2,000 per month, making it a less attractive proposition. In layman’s terms, your employees’ money simply will not work as hard as it once did—and they shouldn’t have to accept that.

Many will be asking how they can support their workforce under these new and challenging conditions. This is where our Employee Car Benefit Scheme stands strong, providing a valuable work benefit that delivers for both the employer and employee.

The Budget Change That Brings Savings for Salary Sacrifice Car Drivers

There is certainly some doom and gloom around the 2025 Autumn Budget, but all is not lost. From April 2026, the Expensive Car Supplement will increase from £40,000 to £50,000, which could mean savings of nearly £3,000 on a new EV.

Electric cars that previously attracted the £425 yearly charge from year two to six of ownership will now only incur this charge if listed above £50,000. For a salary sacrifice driver, this will mean lower monthly costs and greater overall savings.

EV Pence-per-Mile Tax from April 2028

The much-discussed introduction of a pence-per-mile road tax for EVs from 2028 could act as a barrier to adoption, and industry figures certainly suggest this.

Despite this, there is a window of opportunity: Benefit-in-Kind rates remain exceptionally low until at least 2028, meaning employees can still enjoy the perks of a salary sacrifice car with enhanced savings for at least the next three years. Those who join a scheme now will reap the benefits.

Fuel duty may be frozen again, but EVs still prove cheaper to run compared to their ICE equivalents—even with the future pence-per-mile tax on the horizon.

ECOS Saved for Now

ECOS (Employee Car Ownership Schemes) were given a reprieve until Spring 2030 in the Budget, but that shouldn’t mean businesses offering the scheme should kick the proverbial can down the road.

Many businesses that delay reviewing ECOS strategy will end up costing their workforce in the mid-to-long term. Protecting employees with a ready-made transition solution is valuable for long-term retention.

Making Employees’ Money Work Harder in Reality

Traditional ways of stretching income—such as boosting pension contributions or topping up an ISA—are becoming less and less attractive. Combined with frozen tax thresholds and rising everyday costs, many people will find disposable income under pressure.

That’s where an Employee Car Benefit Scheme through salary sacrifice comes into its own. It offers an all-inclusive solution to driving a new car for less—while reducing reliance on traditional savings tools.

An employee who uses part of their gross salary to fund an all-in-one driving solution—covering insurance, EV home charger, breakdown cover, accident management, tyres, servicing and glass—will see their earnings work harder than those who don’t participate.

Turning part of pay into something tangible and immediately beneficial is a smart and effective way to keep employees satisfied and loyal to your business.

And for employers, you’ll see improved retention, happier colleagues, ESG benefits with reduced CO₂ emissions from your fleet, and potential reductions in NI contributions—putting real savings back in your pocket.